1. Field of the Invention
THIS INVENTION relates to a system for inhibiting fraud in relation to the use of negotiable instruments.
2. Description of the Related Art
Within this specification by a negotiable instrument is meant a cheque, a credit card, a debit card, a bond, a share certificate, an account card, a traveller""s cheque, an electronic transfer, and any other instrument that has inherent value to the owner thereof and in relation to which the owner can suffer a financial loss as a result of unauthorized and/or fraudulent dealing therewith by third parties.
Fraud in relation to the use of negotiable instruments is an international problem. Many different forms of fraud that can result in the owner of a negotiable instrument suffering a financial loss are known, with the common element generally being that the negotiable instrument is presented for serving as a payment for goods purchased, for converting its value into cash, or for depositing its value into a third party account, without authorization of the original owner or in a form in which it has been fraudulently tampered wit to the detriment of the original owner.
Although the invention as defined and described hereafter is directed mainly at inhibiting fraud in relation to the use of cheques and credit cards, it must be understood that the invention applies also to inhibiting of fraud in relation to the use of any other negotiable instrument and the features of the invention must be interpreted as such.
For the sake of convenience and clarity, the original owner of a negotiable instrument as herein envisaged shall merely be referred to as the owner of the negotiable instrument who, in relation to certain negotiable instruments such as cheques, promissory notes, and the like, will be the person issuing such instruments, and in relation to other negotiable instruments such as credit cards, will be the person who legally presents such instruments in order to serve their intended purpose. The owner is thus generally the person, whether a natural or a juristic person, who can suffer a loss as a result of the unauthorized or fraudulent use of the negotiable instrument of which he is the owner.
The person or body to whom a negotiable instrument is presented shall hereinafter be referred to as the presentee who, for example, in relation to cheques, and the like, generally will be a bank and particularly an employee of a bank, and in relation to credit cards, generally will be a vendor who accepts the use of a credit card as payment for goods purchased or for services rendered. The presentee also is the party who, in accordance with the present invention, is generally responsible for ensuring that the owner of the negotiable instrument is not prejudiced.
The person presenting a negotiable instrument to the presentee shall hereinafter merely be referred to as the presentor and, in practice, this may be a legitimate person to whom the instrument has been issued or who owns the instrument, or an illegitimate person who may be attempting a fraudulent act and/or who is not authorized to present the instrument.
It will be appreciated that the various negotiable instruments as herein envisaged can be associated with various different xe2x80x98typesxe2x80x99 of presenters and presentees. Presentees need not necessarily be banks or vendors, but may be any third party who generally deals with and/or who is responsible for dealing with, such instruments.
The application of the system for inhibiting fraud in relation to the use of negotiable instruments is associated with a suitably programmed central communication and processing unit that can be communicated with via a direct telephone line, via the internet, or the like. This unit shall herein be referred to as a central communication and processing unit and any reference to this unit must be interpreted as a reference to a suitably programmed unit that includes means for communicating with the unit, as well as data processing means and data storage means that permit processing of stored data and of data communicated to it, for enabling the system of the invention as defined hereafter.
According to the invention there is provided a system for inhibiting fraud in relation to the use of negotiable instruments, which includes the steps of:
the owners of negotiable instruments communicating with a central communication and processing unit in order to register with the unit by providing information, including at least identification numbers, linked directly with the respective owners and information linked directly with the negotiable instruments in respect of which fraud is to be inhibited, each owner then being provided with an individual secret code by the unit; and
the presentees of negotiable instruments communicating with the central communication and processing unit in order to register with the unit by providing information, including at least identification numbers, linked directly with the respective presentees, each presentee then being provided with an individual secret code by the unit, and which includes, in relation to each negotiable instrument to be issued or used by a registered owner, the steps of:
the registered owner communicating with the central communication and processing unit in order to authorize the negotiable instrument, by identification via the identification number and the individual secret code linked with the owner and by providing sufficient details in respect of the negotiable instrument for subsequently permitting the instrument to be verified, the unit then issuing an authorization code to be linked with the instrument; and
upon presentation of the authorized negotiable instrument by a presentor to a presentee, the presentee communicating with the central communication and processing unit in order to verify the negotiable instrument, by identification via the individual secret code linked with the presentee and providing the authorization code linked with the instrument, the unit in response communicating to the presentee the details for verifying the instrument provided by the owner of the instrument and thereby permitting the presentee to verify the instrument as the instrument authorized by the owner.
The system of the invention particularly may provide for the central communication and processing unit to permit communication via a direct telephone line and, as such, includes an audiotext electronic processing system that permits verbal information to be converted into binary code, and a processing and memory system linked to the audiotext electronic processing system for processing information received by the audiotext electronic processing system and thereby carrying out the functions of the unit. Alternatively, or in addition, the central communication and processing unit may permit communication via the internet and, as such, may include a processing and memory system for receiving and processing information received via the internet and thereby carrying out the functions of the unit.
Presentees registering with the unit also will provide the unit with any other information, including at least their names, that will subsequently permit the unit to identify a particular presentee that dealt with the verification of a particular negotiable instrument.
Owners registering with the unit, insofar as the owners are natural persons, may provide at least their names and their official identity numbers. Insofar as owners are juristic persons such a registered businesses, upon registering with the unit they will provide at least their names and their official registration numbers.
The system of the invention may provide for owners registering with the unit, insofar as they wish to use the system for inhibiting fraud in respect of negotiable instruments such as cheques rendered payable via their bank accounts, to provide the unit with the name of each relevant bank, the branch code associated with the said relevant bank and the relevant bank account number.
Insofar as owners registering with the unit wish to use the system for inhibiting fraud in respect of negotiable instruments such as credit cards issued to them by banks and linked to accounts, the system will provide for such owners to provide the unit with the name of each relevant bank and the card type, the number of each relevant card and the name of the card owner that appears on the card.
Further according to the invention, the system may provide for the registered owner of a cheque being issued by the owner, when authorizing the cheque, to provide to the unit bank account details of the payee and an identification number linked with the payee, the cheque number, the amount indicated on the cheque and the name of the payee and, when issued by the unit with an authorization code, to apply the code to the cheque.
In relation to an authorized cheque, the system may provide for the presentee, upon being presented with an authorized cheque and in order to verify the cheque, following the identification of the presentee to the unit and the provision of the authorization code applied to the cheque, for the unit to communicate to the presentee account details of a payee, the identification number linked with a payee, a cheque number, an amount and a payee name and if this information matches the information applied to the cheque presented, to verify the cheque.
Still further, following verification of the cheque, the system may provide for the unit to provide the presentee with a transaction code which must be applied by the presentee to the cheque, the transaction code permitting details of verification as stored by the unit to be retrieved from the unit.
The system of the invention may provide still further for the registered owner of a credit card issued by a bank, upon authorizing a telephonic or an online credit card transaction, for the owner to provide the unit with the name of the bank that issued the card and the type of card, the card number and the name of the card owner that appears on the card, and when issued with an authorization code by the unit, to supply the code to the vendor with whom the transaction is taking place to permit the vendor as presentee to verify the credit card by communicating with the unit.
Still further according to the invention, the system may provide, when a registered owner of a credit card issued by a bank presents as presentor the card to a vendor as presentee, in order to perform a direct credit card transaction, for the authorization and verification of the card to be simultaneously performed by the presentee providing the unit with the credit card number and the presentor providing the unit with the individual secret code of the owner, in response to which the unit provides the presentee a name of a bank that issued a card, a card number and a name of a card owner and if this information matches the information on the card as presented to the presentee, the card is both authorized and verified thereby.
The invention extends also to a central communication and processing unit which is controlled by a software program for enabling a system for inhibiting fraud in relation to the use of negotiable instruments in accordance with the invention.
Still further, the invention extends to a software program for controlling the operation of a central communication and processing unit for enabling a system for inhibiting fraud in relation to the use of negotiable instruments in accordance with the invention.
It must be appreciated that the system of the invention as above defined may be applied specifically also to the authorization and verification of negotiable instruments not particularly in the form of cheques or credit cards, by applying the same principles to those applied when authorizing and verifying cheques or credit cards, and the system of the invention as defined must be interpreted as such.
Further features of the invention are described hereafter with reference to the accompanying drawings in the form of flow diagrams which illustrate, by way of example, a system for inhibiting fraud in relation to the use of negotiable instruments in the form of cheques and credit cards, in accordance with the invention. In the drawings: